COMMENT: How the credibility of sustainable development impact claims can strengthen – or compromise – the voluntary carbon market
Originally published in Carbon Pulse.
Our Chief Technical Officer, Owen Hewlett, discusses the success of sustainable development in voluntary carbon markets, the opportunity this has provided, the risks, and what needs to be done to ensure that markets have the greatest impact and utmost integrity.
In the early days of the Kyoto Protocol, sceptics claimed that sustainable development was too complex or expensive for carbon market projects. Or that markets could manage only one single indicator: carbon.
Project developers who committed to more demanding standards and the credit buyers who rewarded their efforts have demonstrated that it’s not only possible to embed development in climate protection projects – it’s desirable. If you look at the communications around projects in the voluntary carbon market, you might think these were development projects with climate as a co-benefit rather than the other way around.
The success of sustainable development taking root in the voluntary carbon market has presented both tremendous opportunity and an important risk. Corporate buyers embracing the value of development outcomes has led to more demand – and, rightly, a higher price – for projects that deliver additional benefits. This is a good thing for communities where these projects are implemented, also for progress toward the Sustainable Development Goals (SDGs).
At the same time, this momentum has led to opportunism. Past years have shown a rise in claims around SDG impacts that have not been independently verified and, more recklessly, from projects that haven’t followed adequate safeguards to ensure they haven’t caused any negative impacts. In short, SDG washing.
Recent market developments have shown light on the importance of safeguards and sustainable development yet have done little to address the SDG washing problem.
In March 2020, CORSIA eligibility codified the importance of safeguards and sustainable development by setting minimum criteria in the emerging aviation compliance carbon market. Yet projects can claim these SDG impacts retroactively, on a narrative basis, and without independent verification.
More recently, I’ve sat on the Taskforce to Scale the Voluntary Carbon Market, which appears to seek extending a similar minimum bar across the voluntary carbon market with a new benchmark.
However, if a buyer purchases a benchmark derivative defined by CORSIA eligibility criteria, for example, without reviewing the underlying project, they might have purchased an industrial gas destruction project with no quantifiable development benefits or a household biogas project in Sub-Saharan Africa that has followed rigorous safeguards and has monitored and verified impact toward five or more SDGs.
While setting a minimum bar is progress, it isn’t enough. In fact, as proposed now, these efforts make safeguards and SD a box-checking exercise and risk de-incentivising the truly high-impact projects that civil society has been calling for markets to target.
This limits the potential impact of a robust voluntary carbon market and poses a threat to public and civil society support for market mechanisms.
We are entering a new paradigm with the Paris Agreement coming into force. Now is the time to ensure markets have the greatest impact and the utmost integrity. Let’s avoid the temptation for over-simplifying, overclaiming, or other forms of “SDG washing” that will undermine market credibility and the reputation of credit buyers who create revenue streams for projects around the world.
Rather, let’s ensure meaningful, verified contributions to sustainable development. In this way, we can position market mechanisms as an effective tool to accelerate progress not just to Paris, but also to the Agenda for Development 2030.
As Chief Technical Officer at Gold Standard, Owen is responsible for the development of all innovations, standards, methodologies and tools at the voluntary project certifier. Owen led the development of the ‘Gold Standard for the Global Goals’, a first of kind impact-standard focused on the Sustainable Development Goals.